ISIS Asset Management is favoring high-yield in its £170 million Strategic Bond Fund. The total return fund can include any mix of assets and the high-yield portion has increased recently to 68%. "High-yield is the best performing asset class at the moment, given a rising interest-rate scenario," said James Foster, director and head of credit in London. "We especially like the riskier, higher-beta names within single-Bs, rather than the dull, utility-like names," he added, pointing to Invensys as an example of the industrial cyclicals he favors within high-yield.
The sectors Foster favors least are the retailers due to their consumer exposure and financials because of their reliance on the housing market, on which the fund manager said he is cautious.
Foster has not been involved in recent new issues, calling most of them "rubbish." He did not participate in the recent Autostrade deal, for example, because he thought the credit ratings didn't adequately reflect the risk.
